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Hitting Rock Bottom: Economic Hardship and Cheating

Author

Listed:
  • Livia Alfonsi
  • Michal Bauer
  • Julie Chytilová
  • Edward Miguel

Abstract

This paper investigates whether economic hardship undermines preferences for honesty. We use controlled, high-stake measures of cheating for private benefit in a large sample of 5,664 Kenyans, exploiting three complementary sources of variation: experimentally manipulated monetary incentives to cheat, a randomized increase in the salience of one’s own financial situation, and the Covid‐19 income shock (exploiting randomized survey timing, with respondents interviewed before vs. during the crisis). We find that cheating behavior is highly responsive to financial incentives in the experiment. Covid-19 economic hardship—marked by a 51% drop in monthly earnings—leads to a sharp increase in the prevalence of cheating, and the effect increases gradually with prolonged hardship. The effects are largest among the most economically impacted and are amplified when the salience of one’s own financial situation is experimentally increased. The results demonstrate that while most individuals exhibit a strong preference against cheating under normal conditions (in line with the existing body of work), economic forces can account for a substantial share of variation in dishonesty: the estimated cheating rate rises from 29% under low stakes in normal times to 86% under high stakes during the crisis.

Suggested Citation

  • Livia Alfonsi & Michal Bauer & Julie Chytilová & Edward Miguel, 2026. "Hitting Rock Bottom: Economic Hardship and Cheating," NBER Working Papers 34695, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34695
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    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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